Gallagher Construction

What is the Purpose of Commercial Tenant Improvement?

The space most tenants want to rent may require some form of renovation to make it suitable for the needs of the occupant. This is when an agreement called Tenant Improvement Allowance will have to be drawn up between the landlord and the soon-to-be occupant to share the costs associated with renovating the place.

This plan can pave a two-way avenue for both parties to benefit from. The owner is assured of a done deal with a long-term lessee who’s worth the commercial tenant improvement. As for the occupant, the person can negotiate for a discounted rent over a fixed period so as to recover expenses. Makes business sense, right?

Examples of Tenant Improvement

Businesses have different concepts of how their offices should look. They may require added work to be done for individual spaces, such as a meeting room, a small kitchen, and an extra bathroom. It will cost, and this is when one can negotiate for Tenant Improvement to absorb the initial price tag of starting the operation. With such an agreement in place, extra expenditures on the planned renovation wouldn’t make it too steep.

Another common practice is that the landlord agrees to pay a predetermined amount for the improvements that are based on the size of the space, and the tenant will pay what’s beyond it. The owner of the place doesn’t really have to enter into any such arrangement, but it may be profitable to do so if the potential occupant is willing to sign a lease contract covering a long period of rent, that’ll be worth considering.


The touch-up an occupant wants to do with the space being rented will be up to standard if the person who’s paying for the project is the one overseeing it. This way, a watchful eye is assured, and it limits the tendency of going over budget or of there being issues with the quality of the work. If the owner takes charge, your only input would be having a say on what needs to be done. Beyond that, one just has to wait.

There’s also the built-in advantage that has to do with tax benefits. If it’s the landlord doing it, the Tenant Improvement can lower business taxes for the person. If the tenant takes responsibility for the project, then the depreciation will be attributed to the leaseholder.


Some improvements can only go so far so as not to affect the stability of the building. Reach an agreement on improvement options with the landlord. Only then can the leaseholder look for a contractor who can do the job. Consult with a remodeling contractor in Hayden, ID. Another consideration is the tenants, who might otherwise be disturbed by the project and whose approval you’ll need before starting the work.

How Much TI Can You Ask For?

This can differ depending on the financial standing of your business. Other key points are the length of your lease and your rent. It would be good to provide your potential landlord with financials for review, like two years of tax returns, balance sheets, profit and loss statements, and other documents that show how solid the business is. This will give the lessor an idea of how much tenant improvement you’re good for.

Long Story Short

A tenant can customize the business space that he or she’s interested in and have the upgrades paid for by the owner through commercial tenant improvement. It could come in the form of reimbursement or a discount on rent for a specific period. Once that’s been discussed, then comes the important task of finding the right general contractor who can help you design or remodel that launching pad for your future business empire.

Make sure the company is licensed and insured, has been in business for a long time, and has an online reputation for being on time and staying on budget. These are qualities you’ll find here at Gallagher Construction. Check us out by scrolling through our website or call us at 208 635 5326 for more information.

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